CWA REPORT ON STATE HEALTH BENEFITS PLAN 2017

There are significant changes to the State Health Benefits Plan
(SHBP) for 2017 . Your employer will distribute open enrollment information
during the month of October and before January. We are publishing some
beginning information so that you can begin evaluating your health care needs
and determine if any changes are appropriate. As the state puts out more
information during the month of October, we will send additional updates to the
membership.

OPEN ENROLLMENT PERIOD

The Open Enrollment period for State Health Benefits Plan (SHBP) begins on October 3,
2016 and ends on October 31, 2016. Open enrollment dates may be extended. During Open
Enrollment active employees in the SHBP can make changes to their dependents or
enroll in a different health plan. All changes made during Open Enrollment will
take effect on January 1, 2017 for state and local SHBP members.

TIERED NETWORK INCENTIVES

The tiered network plans, Aetna’s Liberty Plan and Horizon’s
Omnia, are voluntary and no workers will be required to select one of these
plans, they are just additional options offered through the SHBP. CWA voted in
favor of the creation of the Tiered Networks because we think this is an option
that will fit the needs of many, but not all of our members.

State employees who switch to one of the tiered network plans
during Open Enrollment as new subscribers beginning January 1, 2017 for
a minimum of two years will receive incentive payments of $2000 for those with
family coverage, $1250 for parent/child or employee/spouse coverage, and $1000
for single coverage. The payments will come during the first quarter of next
year.

Tiered network plans are for not for everyone. However, if you
will use Tier 1 doctors and hospitals, then this plan may save you money at
considerably reduced premium share. You will save 25% over the cost of
Direct 15 and you will get the incentive. Here is an example: let’s say
that you are paying $400 a month toward your Direct 15 Family coverage + $150 a
month for prescription. If you took the Tiered Network, you would pay
$300 a month + you would get a $2000 incentive gift card for signing up.
You would save $1200 in premiums a year and you would get $2000.
Over the course of the 2-year commitment, you would save $2400 in premium, and
$2000 in incentive— $4,400.

If your doctor(s) are not Tier 1 doctors, however, the Tiered
Network may not be for you. You can check and see if your doctor(s) are
in the Aetna or Horizon plans by looking at their website. Make sure that
you also check the Hospitals listed. Only Aetna has Pennsylvania and New
York Hospitals in their top tier.

Please research your
doctors/hospitals carefully. The Tiered Network has the potential to save your
family a great deal of money— if it is right for you. But it can also
cost you money if it isn’t.

DIRECT PRIMARY CARE PILOT PROGRAM

Any active employee member in any PPO or tiered network plan can
join the Direct Primary Care pilot. You can join anytime during the year— not
just during open enrollment. This program does not change the plan you are in, it provides
specialized primary care at no cost.

Direct Primary Care features primary care doctors who will have significantly
fewer patients than now (average today of 2500 to 3000 patients per doctor
versus no more than a thousand for Direct Primary Care), same day/next day
appointments, 24/7 access to your doctor, and appointments that are as long as
they need to be. In many ways this pilot gets back to the day when physicians
could spend time with patients.

When you or a family member visits a Direct Primary Care office
you will never pay a copay.

In 2016-2017 two providers will be opening offices— R Health in
South Jersey and Mercer County and Paladina in North Jersey and Mercer
County. R Health will have Direct Primary Care offices open this
Fall and Paladina expects to have offices open by March 2017. We
anticipate that more providers to join the Direct Primary Care program later.

This is an “add-on” to all of the Direct and Tiered Network
plans. You can be in Direct 15 and join this add-on or you can be in the
Tiered Network. It will not affect your premiums. Before you
decide to join one of these Direct Primary care offices, you can go to an Open
House at the Doctor’s practice or go to what will be one of the many
opportunities to learn about this Pilot Project.

CHANGES TO THE SHBP FOR PLAN YEAR 2017

While there no changes to copays, deductibles or covered
treatment, there are several changes in Plan Design that will affect what is
covered and potentially your out-of-pocket costs. There are important changes
concerning prescription drugs, physical therapy. These changes were passed at
the Plan Design Committee by the 6 management members and 1 union member from
the Patrolman’s Benevolent Association (PBA). CWA and the rest of the Union
members on the Plan Design Committee did not vote for them. However, with the PBA vote, management
had a majority vote and succeeded in putting these changes through

1 Prescription Drugs

There are three changes to prescription drug coverage. In
all cases, if you need a drug that is not covered under the changes, there is
an appeals process and during the appeals process you will continue to get the
drug that you were prescribed. In all cases, the union members of the Plan
Design Committee are closely monitoring these changes. For the mandatory
generic and formulary programs, next year the Plan Design Committee will have
to affirmatively vote to continue the changes.

• Mandatory Generics

Effective December 1, if there is no medical reason for using a
brand drug, when a generic equivalent of that drug is available, only the
generic drug will be covered.

Currently, if a state worker insists upon taking a brand
medication when there is a generic, and you do not have a medical reason for
doing so— you can get the brand if you pay a higher copay for it.

If you do have a medical reason for taking a brand, (you get a
rash from the generic, it gives you headaches, etc.,) you will be able to
produce that medical evidence and you should be able to get the brand. BUT if
you can’t produce that medical evidence, the brand medicine (when a generic is
available) will not be covered.

CWA does not expect this to be a problem for 99% of our members,
but if you have any problem with it please let your Local know. This program
will expire after one year unless the Plan Design Committee extends it.

• Step Therapy

Effective November 1, Step therapy will now apply to all State
employees, where members will be required to try a more cost-effective drug
before trying a more expensive drug.

Background: In 2009, the SHBP unilaterally put in a step therapy
program— meaning they wanted some people to try one drug and see if it worked
before trying a more expensive drug. CWA challenged this under the state worker
contract and won a big arbitration case which prevented most state workers from
being covered by step therapy. Step Therapy was put in place for Local
Government, Rutgers and for state management.

We do not expect this to have a significant impact on our
members, but again, if you have a problem with it, if you need a different drug
and submit an appeal, please let your Local know.

• Prescription Formulary

Effective December 1, nearly all prescription drug plans
including the SHBP retiree RX plan, now have a prescription “formulary” of
preferred and non-preferred drugs. Much of the time this is just about
negotiating a better price for test strips or particular catheter tubes.
Other times it is about specific drugs themselves being excluded. We have never
had a formulary. Your doctor wrote a prescription, you got that drug. Under the
new plan for active members, some supplies and drugs will not be available
except if is medically necessary that you take that drug rather than the drug
on the formulary.

We do not expect many problems from the formulary, however, we
do have members whose doctors do not want them on the formulary drugs for
medical reasons and they will need to appeal. We will be closely monitoring
this program— it will expire after one year unless the Plan Design Committee
votes to extend it.

2 Physical Therapy

Effective November 1, reimbursement to out-of-network physical
therapists will change. The Out-of-network physical therapists will no longer
receive higher reimbursement than in-network therapists. We do not anticipate a
negative impact on members. We will be working with the Physical
Therapists’ Association to encourage the use of physical therapy to speed
recovery and lessen the use of more painful and difficult pain relief options.

3. Emergency Room Co-Pays

The ER copay will increase by $25 for all plans where the co-pay
is currently less than $100. For example, Aetna Freedom 15 7 NJ DIRECT 15 was
$75 and will now be $100. This increase does not apply to dependents under the
age of 19, for anyone referred to the ER by a physician or for anyone admitted to
the hospital within 24 hours.

PREMIUM RATES FOR 2017

Effective January 1, 2017, AON recommended overall increases of
3.4% for active employees to the total premium costs of the medical and
prescription drug plans. The overall increase reflects the impact of a:

• 1.9% increase in Single and
Employee+Spouse rates,

• a 4.4% increase in the
Family rates, and

• a 5.9% increase in
Employee+Child(ren) rates.

The recommended renewal increases were calculated separately for
the PPO (which includes the High Deductible plans), HMO, and Prescription Drug
Plans.

DENTAL PLANS

Rates for the Dental Expense Plan are going up 2.8% for
actives and 5.1% for retirees. Rates for the five Dental Plan Organizations: a
5% decrease for MetLife and Horizon, premiums are unchanged for Healthplex and
Aetna and a 2% increase for Aetna. Dental Provider Organizations feature very
narrow networks.